Accounting Chap 16

Short-term creditors are typically most interested in analyzing a company's

Liquidity

Which of the following is the most useful in analyzing companies of different sizes?

common-sized financial statements

Which of the following measures a company's ability to pay its current liabilities?

current ratio

Leverage implies that a company has

debt financing

In preparing the statement of cash flows, the correct order of reporting cash activities is financing, operating, and investing.

false

The independent auditor's report

gives the auditor's opinion regarding the fairness of the financial statements

One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to

make a better comparison of two companies of different sizes in the same industry

Horizontal analysis is a technique for evaluating financial statement data

over a period of time

The purpose of an audit is to

render an opinion on the fairness of the statements

Which of the following is required by the Sarbanes-Oxley Act?

report on internal control

An analysis in which all the components of an income statement are expressed as a percentage of sales is a

vertical analysis